Treatment Cost Methods

Each intervention treatment unit rate will be based off one of the following three (3) ‘Cost Rate Methods’:

  • Unit Rate: when the calculation of a components value is dependent on the size (or amount) of the component. The Unit Rate is multiplied by the component ‘Cost Unit’ value to yield the calculated cost. For Unit Rate, the formula for replacement cost is:

    $$\lbrack Unit\ Rate\rbrack\ \times \ \lbrack Component\ Cost\ Units\rbrack$$

  • Fixed Value: when the components value is a known fixed figure. No calculation occurs for Fixed Value costs. For Fixed Value, the formula for replacement cost is:

    $$\lbrack Unit\ Rate\rbrack$$

  • Network Asset: when the individual cost of the component is negligible; at a network level however, the cost of a large collection of said components is substantial, and that is what is stored. To calculate individual component cost of a Network Asset, the proportionate share of ‘Cost Units’ of the component is multiplied by the Network Asset value. For Network Assets, the formula for replacement cost is:

    $$\frac{\lbrack Unit\ Rate\rbrack}{\Sigma\lbrack Network\ Cost\ Units\rbrack} \times \lbrack Component\ Cost\ Units\rbrack$$
Example
Unit Rate

Consider the road surface component of a road Asset. The ‘Cost Units’ of the component relates to the area (square metres) of the surface - say 1200 m^2^. The unit rate of the treatment is $3.25. The replacement cost of the Component is therefore:

$$\$1200 \times 3.25 = \$3900$$
Fixed Value

Consider a shade structure. The fixed value of the treatment is $6500. The replacement cost is therefore:

$$\$6500$$
Network Asset

Consider a network of street bins. The network rate of the treatment is $15,000 (which is the total cost of all the bins in the network). The network consists of 100 bins; 80 of these are standard street bins, 20 are premium street bins. To cater for the difference in the individual costs, the ‘Cost Units’ for the standard street bins is 1, and 2 for the premium street bins.

The individual cost for a standard street bin is therefore:

$$ \frac{\$ 15000}{(80\ \times 1) + (20\ \times 2)}\ \times 1\ = \$ 125 $$

The individual cost for a premium street bin is:

$$ \frac{\$ 15000}{(80\ \times 1) + (20\ \times 2)}\ \times 2\ = \$ 250 $$